Shares of salesforce.com, Inc. (CRM -7.28%) stock fell over 4% after-hours on weaker than expected fourth quarter guidance. For Q3, revenue and earnings came in ahead of Wall Street's projections:
|
Consensus estimate |
$1,371.13 million |
27.4% |
$0.13 |
44.4% |
|
Q3 actuals |
$1,383.66 million |
28.6% |
$0.14 |
55.6% |
|
DIFFERENCE |
+$12.53 million |
+1.2% |
+$0.01 |
+11.2% |
Sources: S&P Capital IQ, Salesforce press release.
"Salesforce continues to be the fastest growing top 10 software company, with constant currency revenue and deferred revenue growth of 30% or more year-over-year," said CEO and co-founder Marc Benioff in a news release announcing the results.
What went right: Salesforce continues to be every bit the growth story Benioff touts it as. Overall revenue grew 30% after accounting for currency effects while earnings per share soared over 55%. Gross margin improved a percentage point -- to 76% -- reflecting sustained pricing power for the company's various cloud computing products.
What went wrong: Cash from operations fell 11.1% year over year to $122.5 million. Free cash flow dipped 24.7% as capital expenditures increased slightly. Unbilled deferred revenue -- sales pegged to long-term contracts but not yet accounted for on the balance sheet -- grew faster than deferred revenue. (29% vs. 28%, to be precise.) While this isn't necessarily a problem, cash receipts beat contracted work every time.
What's next: Looking ahead, Salesforce projected $1.436 billion and $1.441 billion in fiscal Q4 revenue, resulting in $0.13 to $0.14 a share of profit after excluding stock options and other non-cash costs. Analysts polled by S&P Capital IQ, were expecting $1,450.83 million in revenue and $0.15 in adjusted earnings per share.
For the full year, Salesforce is aiming for $5.365 billion and $5.370 billion in revenue and $0.51 to $0.52 in adjusted earnings per share. Wall Street is targeting $5,367.47 million and $0.52, respectively. Salesforce will close its fiscal year on Jan. 31, 2015.
